Venture Capitalists: The Term “Cleanweb” Has Got to Go

Date:03/01/2014

Company:RockPort Capital

Source:CleantechIQ

Cleanweb was a term fittingly created by a venture capitalist, Sunil Paul, in 2011. It has nabbed around one-quarter of all cleantech investments, with venture capitalists providing much of the funding.

Cleanweb, in particular, is attractive to VC firms for its capital-light investing nature, its mission to drive forward the adoption of underlying hardware innovations, and ability to quickly generate revenue..

Still, Cleanweb has got to go… As in, disappear, forever..

The name, that is..

“Cleanweb” is simply not resonating—though an adequate replacement remains elusive..

That was among the takeaways from the “Cleanweb” panel held during this year’s Cleantech Innovation Summit in Newport Beach, California, in February..

When the audience was asked how many of them actively use the word “Cleanweb” in their investment strategies, not one hand was raised. “Digital energy” fared little better, earning a single hand out of the few hundred venture capitalists in the room..

As for the panelists, Abe Yokell, Partner at VC firm RockPort Capital Partners, bluntly said: “I don’t like Cleanweb very much—not because it’s not a great term, but because I think, in my mind, it conjures an image that is somewhat limited. And when I talk about how deep this goes into our physical world, ‘web,’ to me, sounds like it’s a web brower, which is very limited.” RockPort coins their investments as “Energy, Mobility, and Sustainability” and has $850 million under management with 40 portfolio companies..

Acknowledging that he is aware of no better option on the horizon, Yokell said that a more expansive term would certainly help. “It’s very helpful to have a nail to hang a hat on; to … coalesce an industry around a concept. … The trick is making sure [the term is] broad enough but still actually delivers real value as we go out to talk to LPs, for example. It’s helpful to have some cohesive structure [so] that you can talk about what the unifying aspects of your investment theses are.”.

RockPort’s Investments Span Both the Digital and Physical Worlds.

RockPort was among the top Smart Grid venture investors of 2013, with four deals, according to a Mercom Capital report. One of its deals was among the largest in the home/building space: RockPort and four other firms invested $20 million, combined, in Enlighted, a company that controls lighting, temperature and energy consumption in buildings via sensors and analytics.

There’s been “a shift in emphasis towards companies [in which] we have a pretty high confidence level, where we invest limited amounts of capital and see very specific milestones and results,” Yokell said.

RockPort has a broad portfolio based on its “long history focused on some aspects of the digital world as it intersects with the physical world,” he added.

“What we have observed, over time—the fund is now 14 years old—is that some of the investments we made in some of the materials-focused businesses have taken unexpectedly long and cost too much money, and more than we expected [to be paying] when we first budgeted.” However, he added, the firm still does focus on “physical world assets.”

He cited his firm’s recent investment in GlassPoint, which uses solar power to create steam and produce electricity for oil drilling facilities. GlassPoint received a $26 million Series B funding in Dec. 2012. In addition to RockPort, its investors included: Royal Dutch Shell, Nth Power and Chrysalix.

“We’re not backing down from these models as long as we can see a clear ramp on the funding side, and in that case [GlassPoint], it clearly appealed to a large corporate infrastructure where if we knew we’d hit certain milestones, there was a very high probability that that model would get funded,” he said.

That traditional cleantech funding model “has broken down pretty much entirely, unless you can focus in on these kinds of very specific risk-reduction movements with limited dollars,” he added.

Yokell described his firm’s investment in Ecofactor as part of a larger, long-term strategy. The company received a $10 million Series B round in October of last year with backers including Claremont Creek and Aster Capital.

Ecofactor takes data from Internet-connected, third-party thermostats and uses it to deliver energy savings in homes.

“We’re a big believer in urban mobility…some big urbanization trends that are coming over the next 40 years are going to have a very big impact on our city infrastructure, and that covers transportation and mobility.”

Another key area that Yokell is excited to invest in is the “built environment.” Examples he cited include lighting control systems featuring digital technologies capable of “spitting out data that you can monetize, that you can create value from for the customers as well as those providing the devices and services, [that is something that] that gets very, very interesting…”

And, as prices come down for computers, as well as connectivity costs, he noted, this area of the built environment will serve as a “very rich area of feature innovation.”

Other key RockPort investment theme buzzwords he cited include “the Internet of things,” “big data” and the “connected home.”.